Low-wage Workers: Better Educated and Older but Still Underpaid

Contact: Alan Barber (202) 293-5380 x115

Washington DC - Today’s low-wage workers are both older and much better-educated than the average low-wage worker in the past. In theory, this should mean that these workers also earn much more the in the past. A high school degree, an associate’s degree from a two year college, a bachelor’s degree from a four year college or an advanced degree adds to a worker’s skills. Likewise, each year of work also experience adds to a worker’s skills. Strikingly, though, a new issue brief from the Center for Economic and Policy Research shows that low-wage workers have not seen a commensurate increase in pay.

“These workers have done all the things you would expect to make more money,” said Cherrie Bucknor of CEPR and the author of the brief. “They have finished high school or gotten a degree and have work experience. Nevertheless, they still find themselves underpaid.”

In the brief, Bucknor defines low-wage workers as those earning at least or less than $10.58 an hour in inflation-adjusted 2014 dollars. This amount is roughly equivalent to $12.00 per hour in 2020, the amount proposed by Raise the Wage Act of 2015. This stands slightly above the peak value of the 1968 minimum wage which was equal to $9.54 in inflation-adjusted 2014 dollars. While some low-wage workers do make more than the historic high of the minimum wage, most of the workers in this group make less.

In addition to earnings, Bucknor looks at several characteristics of low-wage workers both now and in the past. In 1979, 26.9 percent of low wage workers were teenagers; now that number is just 12.1 percent. In 1979 almost 36 percent of low-wage workers were 35 and older. In 2014, that percentage had risen to 42.4 percent. The educational attainment of these workers has also improved. In 1979, 40.7 percent of low-wage workers had less than a high school degree. Today that number is 18.3 percent. Over the same span of time, the percent of low-wage workers with a bachelor’s degree or higher has almost doubled.

Bucknor demonstrates that today’s low-wage workers are older and better educated than their counterparts were 35 years ago. Even so, the federal minimum wage is still far below its historical peak. Efforts to raise the wage would do much to correct the erosion of the value of the minimum wage and return it to a level we have not seen in almost 50 years.